Your friend, Suzie Whitson, has designed a new type of outdoor toy that helps children learn basic concepts such as colors, numb

Question

2 years ago

12

Your friend, Suzie Whitson, has designed a new type of outdoor toy that helps children learn basic concepts such as colors, numb

ers, and shapes. Suzie’s product will target two groups: day care centers in warm climates and home school programs. Her company is Jiffy Jet and costs for last month follow: Factory rent $ 3,130 Company advertising 1,060 Wages paid to assembly workers 30,500 Depreciation for salespersons’ vehicles 2,200 Screws 535 Utilities for factory 845 Assembly supervisor’s salary 3,580 Sandpaper 185 President’s salary 5,180 Plastic tubing 4,050 Paint 285 Sales commissions 1,350 Factory insurance 1,170 Depreciation on cutting machines 2,000 Wages paid to painters 7,550 Assume that Suzie Whitson has decided to begin production of her outdoor children’s toy. Required: 1 and 2. Identify each of the preceding costs as either a product or a period cost. If the cost is a product cost, decide whether it is for direct materials (DM), direct labor (DL), or manufacturing overhead (MOH) and also identify each of the preceding costs as variable or fixed cost

Business

1 answer:

mina [271] · Answer 1 · 2021-12-27T01:30:01+03:00

Answer:

Factory rent $ 3,130: Product - MOH - Fixed

Company advertising 1,060: Period - Variable

Wages paid to assembly workers 30,500: Product - DL - Variable

Depreciation for salespersons’ vehicles 2,200: Period - Fixed

Screws 535: Product - DM - Variable

Utilities for factory 845: Product - MOH - Variable

Assembly supervisor’s salary 3,580: Product - MOH - Fixed

Sandpaper 185: Product - MOH - Variable

President’s salary 5,180: Period - Fixed

Plastic tubing 4,050: Product - MOH - variable

Paint 285: Product - DM - Variable

Sales commissions 1,350: Period - Variable

Factory insurance 1,170: Product - MOH - fixed

Depreciation on cutting machines 2,000: Product - MOH - Fixed

Wages paid to painters 7,550: Product - DL - Variable

Explanation:

- Direct materials are those materials and supplies that are consumed during the manufacture of a product, and which are directly identified with that product.

- Direct labor is production or services labor that is assigned to a specific product, cost center, or work order.

- Manufacturing overhead refers to indirect factory-related costs that are incurred when a product is manufactured.

- Period costs are not directly tied to the production process. Overhead or sales, general, and administrative (SG&A) costs are considered period costs. SG&A includes costs of the corporate office, selling, marketing, and the overall administration of company business.

- Product costs are the direct costs involved in producing a product. A manufacturer, for example, would have production costs that include: Direct labor, Raw materials, Manufacturing supplies, Overhead that's directly tied to the production facility such as electricity.

- Variable cost is a corporate expense that changes in proportion to production output.

- Fixed cost is a cost that does not change with an increase or decrease in the amount of goods or services produced or sold.

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